Q.Under what circumstances can a subsidiary company acquire membership of holding company?

A subsidiary generally cannot be a member of its holding company, except: (i) as legal representative of a deceased member, (ii) as a trustee, or (iii) where it was already a member before becoming a subsidiary. The law prohibits a subsidiary company from being a member of its holding company (and any allotment/transfer of the holding company's shares to a subsidiary is void), to prevent the holding company from indirectly controlling itself. However, a subsidiary can be/hold membership of the holding company in these circumstances: 1. Where the subsidiary is a legal representative of a deceased member of the holding company. 2. Where the subsidiary holds the shares as a trustee (in a fiduciary capacity), provided the holding company is not beneficially interested. 3. Where the subsidiary was **already a member of the holdi …